Hindustan Unilever Limited: history, ownership, mission, how it works & makes money

A Brief History of Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is one of the largest fast-moving consumer goods (FMCG) companies in India. Originally founded as Lever Brothers in 1933, it became Hindustan Lever Limited in 1956 after merging with other companies. The name was changed to Hindustan Unilever Limited in 2007 as it aligned with its parent company, Unilever, a global leader in consumer goods.

Throughout the decades, HUL has expanded its product portfolio significantly. By 2022, it marketed over **400 brands**, with a presence in **14** distinct categories including personal care, home care, and foods.

HUL's revenue has shown impressive growth over the years. In the financial year 2022-2023, HUL reported a revenue of **₹60,249 crores** (approximately **$7.3 billion**), reflecting a growth of **10.3%** YoY. The net profit for the same period stood at **₹11,028 crores** (around **$1.34 billion**), marking an increase of **6.6%** compared to the previous fiscal year.

The company operates through multiple segments, each contributing to its overall revenue. Below is a breakdown of revenue contributions by segment for FY 2022-2023:

HUL has focused heavily on innovation and marketing to stay relevant in the competitive FMCG landscape. The company spent approximately **₹9,800 crores** on advertising and promotions in FY 2022-2023, which is about **16.3%** of its total revenue.

In terms of market capitalization, as of October 2023, HUL's market cap was valued at around **₹6.1 lakh crores** (approximately **$73.5 billion**), making it one of the most valuable FMCG companies in India. It also consistently pays out dividends to shareholders, with a dividend yield of approximately **1.4%** in FY 2022-2023, translating to a total dividend payout of **₹5,700 crores**.

HUL's stock performance has been robust, reflecting its business strength. The stock price was approximately **₹2,650** as of October 2023, which is a rise of about **18%** over the last year. The company also has a strong return on equity (ROE) of **98%**, indicating effective management of shareholder equity.

In terms of geographic reach, HUL has established a significant presence across rural and urban segments. Approximately **52%** of its total sales come from rural markets, which have been a key growth driver in recent years. The company's distribution network is extensive, with reach to over **10 million** retail outlets across India.

HUL continues to prioritize sustainability, aiming for **100% recyclable packaging** by 2025 and achieving a water sustainability goal of **35%** reduction in water usage across its manufacturing operations by 2030.

This sustained commitment to growth, innovation, and sustainability reinforces HUL's position as a leader in the Indian FMCG sector, supported by its historical legacy and ongoing performance metrics.

A Who Owns Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is one of the largest fast-moving consumer goods (FMCG) companies in India. Its ownership structure is diverse, comprising institutional, individual, and foreign investors.

Shareholding Pattern

The majority of HUL's shares are held by the parent company, Unilever PLC, which is headquartered in London. Unilever PLC holds a significant stake of approximately 61.90% in HUL.

Key Shareholders

• Unilever PLC: 61.90%
• Life Insurance Corporation of India (LIC): 4.35%
• State Bank of India: 2.32%
• Other Mutual Funds: 3.75%
• Other Foreign Investors: 5.26%

The influence of foreign institutional investors is notable, given their combined ownership of approximately 15.63%. This indicates a strong foreign interest in one of India's leading FMCG companies.

Market Capitalization

As of October 2023, HUL has a market capitalization of approximately ₹5.75 trillion. This positions HUL among the top companies listed on the Bombay Stock Exchange (BSE).

Recent Performance

In the second quarter of FY2024, HUL reported a revenue of ₹15,228 crore, marking an increase of 16% year-over-year. The net profit for the same period was reported at ₹2,529 crore.

Corporate Governance

HUL is governed by a Board of Directors that includes a mix of executive and non-executive members, ensuring compliance and strategic oversight. The current Chairman is Nitin Paranjpe, CEO of HUL, while the board includes directors from diverse backgrounds in finance, marketing, and operations.

Conclusion on Ownership Dynamics

The diversified ownership structure of HUL indicates robust institutional support and a significant interest from foreign investors. This mix of ownership is vital for maintaining the company's financial stability and growth trajectory in the competitive FMCG market.

Hindustan Unilever Limited Mission Statement

Hindustan Unilever Limited (HUL) operates with a mission statement focused on sustainable growth, with an emphasis on delivering consumer value. Their mission encapsulates three key aspects: enhancing the quality of life, driving sustainable growth, and providing superior products.

The company strives to Make Sustainable Living Commonplace. This mission aligns with Unilever’s global objectives while localizing strategies to cater to the Indian consumer base.

HUL’s fiscal performance reflects its commitment to these principles. In FY 2022-23, the company reported a revenue of approximately ₹60,164 crores, representing a growth of 10.8% over the previous year. The net profit stood at ₹9,880 crores, with an operating margin of 22.7%.

As of September 2023, HUL’s market capitalization was approximately ₹6.03 lakh crores, making it one of the most valuable companies on the National Stock Exchange of India. The company’s return on equity (ROE) was reported at 90.81%, showcasing effective utilization of shareholders' equity.

HUL has also made strides in its social responsibility initiatives, with a commitment to ensuring that 35% of its products meet sustainable sourcing criteria by 2025. The company is actively working to reduce plastic waste, with a target to make all its plastic packaging recyclable, reusable, or compostable by 2025.

In support of its mission, HUL continues to invest significantly in research and development, with an expenditure of around ₹1,500 crores in 2022-23. This investment facilitates the development of innovative products that meet consumer needs while adhering to environmental standards.

How Hindustan Unilever Limited Works

Hindustan Unilever Limited (HUL) operates as a consumer goods company headquartered in Mumbai, India. As a subsidiary of Unilever, it is one of the largest FMCG (Fast-Moving Consumer Goods) companies in India. The company’s portfolio includes a diverse range of products across categories such as personal care, home care, and food & beverages.

Business Segments

HUL focuses on six main product segments:

• Beauty & Personal Care
• Home Care
• Food & Refreshment
• Nutrition
• Ice Cream & Frozen Desserts
• Value-Added Dairy

Financial Performance

In the fiscal year 2022-2023, HUL reported:

For Q2 FY 2023, HUL reported:

Research and Development

HUL invests a significant portion of its revenue in R&D to innovate and enhance product offerings. In FY 2022-2023, the R&D expenditure was approximately 1,200 crores, focusing on sustainable product development and consumer insights.

Key Strategies

• Innovative Marketing: HUL employs advanced digital marketing strategies and collaborations with influencers.
• Sustainability Initiatives: The company aims to reduce plastic usage by 50% by 2025 and source 100% of its packaging from recyclable or reusable materials.
• Product Diversification: Continuous expansion into new categories like health foods and organic products to capture emerging market trends.

Market Position

HUL holds a dominant market position, with brands like Dove, Surf Excel, and Lipton leading in their respective categories. The company's market capital as of October 2023 stands at approximately 6,00,000 crores.

Distribution Network

HUL has an extensive distribution network, comprising over 8 million retail outlets across India, enabling it to reach a vast customer base. This network is complemented by robust e-commerce channels, accounting for about 15% of their total sales.

Financial Ratios

The following financial ratios provide insight into HUL's performance in recent years:

Challenges

Despite its strong market presence, HUL faces challenges such as:

• Intense competition from local and international brands
• Fluctuating raw material prices impacting margins
• Changing consumer preferences towards healthier and organic products

How Hindustan Unilever Limited Makes Money

Hindustan Unilever Limited (HUL) generates revenue through a diverse portfolio of products across various segments. These include Personal Care, Home Care, Foods & Refreshments, and Beauty & Wellbeing. As of the 2022-2023 fiscal year, HUL reported a revenue of ₹60,632 crores, reflecting a growth of **10.00%** year-on-year.

Revenue Segmentation

The revenue breakdown by segment is as follows:

HUL's products are available in over **8 million retail outlets** across India. The company utilizes a robust distribution network, with **more than 2,000 distributors**, ensuring extensive reach in both urban and rural markets.

Marketing and Brand Strategy

HUL invests significantly in advertising and promotions, with a marketing spend of **around ₹8,500 crores** in the last fiscal year. This investment supports the launch of new products and strengthens brand presence. HUL manages a portfolio of over **400 brands**, with **13 brands** exceeding ₹1,000 crores in annual turnover.

Sustainability Initiatives

In recent years, HUL has been focusing on sustainable practices, which not only enhance brand reputation but also contribute positively to the bottom line. The company's Sustainable Living Plan has helped reduce its carbon footprint and promote sustainable sourcing, resulting in operational efficiencies and cost savings.

Financial Performance

As per the latest financial results for Q2 FY2023, HUL reported:

• Net Profit: ₹2,389 crores, an increase of **8.0%** compared to the previous year.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): ₹4,700 crores.
• EBITDA Margin: **24.5%**.

Market Trends and Future Outlook

HUL is poised to benefit from the growing demand for personal and home care products as disposable incomes rise and urbanization continues. The company aims to further penetrate the rural market, targeting an additional **50 million** consumers by the end of the fiscal year.

Furthermore, HUL's focus on digital transformation and e-commerce expansion has proven beneficial. As of December 2022, e-commerce sales contributed to **9%** of the overall revenue, showing a steady upward trend.

The company's stock performance has also been compelling, with a **1-year return** of **28.5%** as per the latest data from the Bombay Stock Exchange, reflecting investor confidence in its business model and growth strategy.